Federalizing Medicaid

Boston University - School of Public Health; Boston University School of Law

Date Written: June 6, 2011

Abstract

Medicaid fosters constant tension between the federal government and the states, and that friction has been exacerbated by its expansion in the Patient Protection and Affordable Care Act of 2010 (PPACA). Medicaid was an under-theorized and underfunded continuation of existing programs that retained two key aspects of welfare medicine as it developed: bias toward limiting government assistance to the “deserving poor,” and delivery of care through the states that resulted in a strong sense of states’ rights. These ideas regarding the deserving poor and federalism have remained constants in the program over the last forty-six years, but PPACA changes one of the two historic themes by expanding eligibility for Medicaid beyond the deserving poor — for the first time in Medicaid’s history — combined with almost total federal funding for the new enrollees. This major philosophical shift moves toward federalizing Medicaid, but the governors claiming that states need more control are protesting the economic aspect of the Medicaid expansion, not this philosophical about-face. In a lawsuit filed the same day PPACA was signed, the states have claimed, among other things, that certain aspects of PPACA violate principles of federalism and the Tenth Amendment, and they claim to be coerced into continuing to participate in Medicaid, a question that the Supreme Court has just granted.

The PPACA litigation illustrates that Medicaid is fixed in the collective consciousness as an example of cooperative federalism, but a federalism policy analysis shows us that this is the wrong path for a variety of reasons. This article first discusses the history and historical structure of Medicaid and its cooperative federalism approach. This section focuses on the two themes of states’ rights and the deserving poor in the creation of Medicaid and demonstrates how PPACA has begun the federalization process. The article next considers the modern Supreme Court’s interpretation of federalism to understand the current meaning of federalism as it may be implemented by the Roberts Court. The PPACA litigation provides a vehicle for thinking through the real meaning of cooperative federalism versus dual sovereignty as explicated by the Court and potentially provides an opportunity for the Court to rein in the federal spending power. The final section of the paper suggests that medicine generally and Medicaid specifically are already on the path to nationalization and explores the conclusion that Medicaid should be nationalized because federalism ideals are generally not served by the current structure.

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